Gold is overheated, leverage at a record high: what this means for bitcoin
Financial markets are sending alarming signals from two fronts simultaneously. Analysts are recording an anomalous overheating of gold, which has transformed from a classic safe-haven asset into a tool for speculation. At the same time, the volume of leveraged trading in US markets has soared to historic highs. For Bitcoin (BTC), this combination represents a double risk.
Gold Loses Its "Safe Haven" Status
The current situation with gold raises serious questions. Its 180-day volatility is trading at a premium of nearly 2.3 times the volatility of the S&P 500 index for the first time since 2007. The precious metal is behaving not like a safe haven, but like a risk asset. The last time this was observed was before the Great Recession, when the stock market showed anomalously low volatility, masking the accumulation of systemic risks.
In February of this year, the price of gold reached an all-time high of around $5,500 per ounce. At that time, the asset was at a 40-year high relative to its 60-month moving average and a basket of US Treasury bonds. This was followed by a correction of approximately 30%. Currently, in my estimation, a pullback to the round support level around $4,000 would be technically justified, but the overall backdrop remains overheated. The rise in 30-year US Treasury yields to nearly 5.2% (the highest since 2007) creates additional pressure on assets that do not generate interest income.
Record Leverage: $460 Billion and Not a Single Bear
An even more alarming signal is coming from the US market. The volume of leveraged positions in US ETFs and inverse funds has reached a record $208 billion. Accounting for double and triple leverage, the real exposure exceeds $460 billion. Since the beginning of April, this figure has grown by approximately $200 billion. The lion's share — $320 billion — is provided by triple-leveraged funds. Inverse funds, which profit from declines, account for only $27 billion. For comparison, during the bear market of 2022, the total exposure of such instruments was only a fraction of current levels. The market has become extremely one-sided.
Implications for Bitcoin
For the leading cryptocurrency, the signal is twofold. If overheated markets with record leverage begin to reverse, Bitcoin, as a risk asset, could come under a wave of forced selling alongside stocks. A chain reaction of liquidations could cause prices to collapse very quickly.
On the other hand, if faith in gold as a safe-haven asset falters, capital will begin to seek a new refuge. And then Bitcoin, with its limited supply and status as "digital gold," could capture this demand. For now, the market is in a fragile equilibrium, and any shift in sentiment could trigger an avalanche.
My expert opinion: I expect that in the coming weeks, we will see an increase in Bitcoin's correlation with stock indices. The risk of a sharp correction due to deleveraging is very high. However, it is precisely this scenario that could become the "moment of truth" that separates speculators from long-term holders and lays the foundation for the next bull rally.